Since early 2020, a combination of COVID-19 disruption – including the ‘pingdemic’ and global logistics delays – and restricted goods and material availability has led to a perfect storm of supply chain challenges. With product and material shortages becoming apparent in industries from construction to retail, there's no quick fix for the supply chain crunch.
Look beyond the consumer headlines – the insurer is at the sharp end
This supply chain disruption and market uncertainty poses an entirely different challenge for the UK insurance industry. Property insurance operations rely on materials and labour to carry out repairs and maintenance but are struggling with a major lack of visibility into accurate pricing and availability.
General and specialist materials are regularly rising in price, with notably long lead times on material orders and several national suppliers reporting double-digit price increases in a single week. Add to this the rising popularity of building projects among homeowners—with home renovation projects up by 16 percent since the start of the first lockdown—and businesses find themselves in a highly competitive market to source materials at consistent prices.
Lack of a bigger picture can mean unnecessary spend
This disruption has become particularly apparent in critical markets such as metal. The latest quarterly analysis by the Verisk pricing team, for example, shows average copper wiring prices have risen by 20.4 percent and copper piping is up 15.06 percent, with regular fluctuations.
Without reliable, up-to-date pricing data, many insurers will struggle to ensure material and labour costs are accurately reflected in premiums and claim expenses—and from a supply chain and repair network perspective, also pay their contractors fairly. This can have a potentially major impact on insurers struggling to both control and classify indemnity spend.
Both insurers and contractors must also ensure accurate pricing and give the right settlement rate to avoid falling foul of the Financial Conduct Authority’s ‘Treating Customers Fairly’ principle. Bring all of this together, and insurers are faced with a rapidly unfolding issue that could impact on brand reputation, the bottom line, customer and contractor relationships.
No time to stand still—static rates can do more harm than good
Unfortunately, much of the market still uses static rates that rarely change and are not intended specifically for repair and restoration work. Many of the semi-regular researched rates use regional percentage adjustments, based on government inflationary indicators and similar sources—opposed to targeted postcode research.
A large proportion of national pricing sources are routinely outdated even under normal market conditions, with updates typically carried out annually. These prices are also geared towards high-value projects and tender work.
Many providers that tap into prices on a regular basis often use a single source of data—but this is also dangerous as pricing can vary between regions and suppliers.
Keep your finger on the pulse with agile pricing insights
It's clear there's a rising industry demand for accurate, reliable data, sourced from experts that are highly reactive to market fluctuations and can reflect these in schedules of rates accordingly. At Verisk, our team provides customers with variable pricing updates that make us a partner of choice for price lists, supplementary data, pricing consultancy, and dedicated expertise in this field.
Pricing data is regularly gathered, analysed, and published by a dedicated pricing team, with data sourced from suppliers at a regional, not national level—helping companies better navigate surge demand and local nuances.
Pricing is listed at the RRP for a single unit for ease of reference, while the regularity of this research allows the team to identify changes at source and alert customers accordingly.
Sustained benefits from leveraging industry expertise and data at scale
Tapping into such pricing sources can help insurers eliminate underpayments caused by unexpected and often unmonitored market fluctuations. They can also better control indemnity spend by ensuring companies are paying fair and accurate prices at any time.
This data driven decision-making process can be further enhanced through powerful direct integrations with industry technology, such as claims estimation platforms. At Verisk, the pricing team feeds the latest price points into property solutions such as Xactimate®.
These can be further customised and tailored to individual insurer and supplier needs, to accommodate different rates for building repair networks, insurers, and beyond.
A fair outcome for all
Identifying and paying the right rate for labour and materials benefits everyone involved in the process – insurers, contractors and customers alike. With the right data, insurers can tighten ‘invisible’ indemnity spend, contain the risk of underpayments, and provide a consistently superior service for the end-customer.
Arming themselves with this information ultimately makes them resilient enough to withstand long-term disruptions and uncertainties such as the ongoing supply chain crisis—helping insurers and contractors navigate unexpected industry challenges with confidence.
Verisk provides extensive up-to-date insights into UK building material and labour costs, through quarterly pricing updates, capabilities within the Verisk Property solutions portfolio and its Annual Property Report. Visit our website and contact the team to learn more.